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**Exhibit 10.31**

 

**SUPPLEMENTALEXECUTIVE RETIREMENT PLAN**

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**2014**

 

THIS AGREEMENT, is made and enteredinto effective as of the 1st day of November 2014 by and between Community Bank of the Chesapeake, a banking corporation organizedand existing under the laws of the State of Maryland, hereinafter referred to as the "Plan Sponsor", and Gregory Cockerham, hereinafter referred to as the "Participant".

 

**WITNESSETH**

 

WHEREAS, it is the consensus ofthe Board that the Participant's services to the Plan Sponsor in the past have been of exceptional merit and have constituted aninvaluable contribution to the general welfare of the Plan Sponsor bringing it to its present status of operating efficiency, andits present position in its field of activity;

 

WHEREAS, the experience of theParticipant, his knowledge of the affairs of the Plan Sponsor, his reputation and contacts in the industry are so valuable thatassurance of his continued services is essential for the future growth and profits of the Plan Sponsor and it is in the best interestsof the Plan Sponsor to arrange terms of continued employment for the Participant so as to reasonably assure his remaining in thePlan Sponsor's employment during his lifetime or until the age of retirement;

 

WHEREAS, it is the desire of thePlan Sponsor that his services be retained as herein provided;

 

WHEREAS, the Participant is willingto continue in the employ of the Plan Sponsor provided the Plan Sponsor agrees to pay to his beneficiaries certain benefits inaccordance with the terms and conditions hereinafter set forth;

 

WHEREAS, the Plan Sponsor intendsthat the Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferredcompensation plan for tax purposes and for purposes of Title I of ERISA. This Plan is not intended to qualify for favorable taxtreatment pursuant to IRC Section 401(a) of the Code or any successor section or statute. This Plan is intended to comply withIRC Section 409A as created under The American Jobs Creation Act of 2004 (the "Jobs Act of 2004"). It is both anticipatedand expected that the terms and provisions of this Plan may need to be amended in the future to assure continued compliance. ThePlan Sponsor and the Participant acknowledge that fact and agree to take any and all steps necessary to operate the Plan in "goodfaith" based on their current understanding of the regulations; and

 

NOW THEREFORE; in considerationof services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained,it is agreed as follows:

 

 

**ARTICLE 1**

**DEFINITIONS**

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DEFINITION OF TERMS. Certain wordsand phrases are defined when first used in later Articles of this Plan. Whenever any words are used herein in the masculine, theyshall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are usedherein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as thecase may be, in all cases where they would so apply. For the purpose of this Plan, unless otherwise clearly apparent from the context,the following phrases or terms shall have the following indicated meanings:

 

1.1   "AccruedBenefit" shall mean the portion of the Participant's Normal Retirement Benefit that has accrued as of the applicable dateof reference, with respect to services performed by the Participant beginning on November 1, 2014, as calculated for purposes ofGenerally Accepted Accounting Principles (GAAP) and recorded on the books of the Plan Sponsor.

 

1.2   "ApplicableGuidance” shall mean, as the context requires, Code §409A and the Final Treasury Regulations issued thereunder, or otherwritten Treasury or IRS guidance regarding or affecting Code §409A.

 

1.3   "Beneficiary"shall mean the person or persons, natural or otherwise, designated in writing by a Participant in accordance with Article 5 beforehis death to receive Plan benefits in the event of the Participant's death.

 

1.4   "Board"shall mean the board of director’s of the Plan Sponsor, unless specifically noted otherwise.

 

1.5   "Cause"shall mean any of the following acts or circumstances: (i) willful destruction by the Participant of property of the Plan Sponsorhaving a material value to the Plan Sponsor; (ii) fraud, embezzlement, theft, or comparable dishonest activity committed by theParticipant (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor); (iii) the Participant's convictionof or entering a plea of guilty or nolo contendere to any crime constituting a felony or any misdemeanor involving fraud, dishonesty,or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor); (iv) the Participant'sbreach, neglect, refusal, or failure to materially discharge the Participant's duties (other than due to physical or mental illness)commensurate with the Participant's title and function or the Participant's failure to comply with the lawful directions of a seniormanaging officer of the Plan Sponsor in any such case that is not cured within fifteen (15) days after the Participant has receivedwritten notice thereof from such senior managing officer; or (v) any willful misconduct by the Participant which may cause substantialeconomic or reputation injury to the Plan Sponsor, including, but not limited to, sexual harassment.

 

 

1.6   "Changein Control” shall mean the occurrence of a Change in Control event, within the meaning of Treasury Regulations §1.409A~3(i)(5)and described in any of subparagraph (a), (b), or (c), (collectively referred to as "Change in Control Events”), orany combination of the Change in Control Events. To constitute a Change in Control Event with respect to the Participant or Beneficiary,the Change in Control Event must relate to: (i) the corporation for whom the Participant is performing services at the time ofthe Change in Control Event; (ii) the corporation that is liable for the payment of the deferred compensation (or all corporationsliable for the payment if more than one corporation is liable); or (iii) a corporation that is a majority shareholder of a corporationidentified in clause (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority shareholderof another corporation in the chain, ending in a corporation identified in clause (i) or (ii).

 

(a)   Changein Ownership. A Change in Ownership occurs if a person, or a group of persons acting together, acquires more than fifty percent(50%) of the stock of the corporation, measured by voting power or value. Incremental increases in ownership by a person or groupthat already owns fifty percent (50%) of the corporation do not result in a Change of Ownership, as defined in Treasury Regulations§1.409A-3(i)(5)(v).

 

(b)   Changein Effective Control. A Change in Effective Control occurs if, over a twelve (12) month period: (i) a person or group acquiresstock representing thirty percent (30%) of the voting power of the corporation; or (ii) a majority of the members of the boardof directors of the ultimate parent corporation is replaced by directors not endorsed by the persons who were members of the boardbefore the new directors' appointment, as defined in Treasury Regulations §1.409A~3(i)(5)(vi).

 

(c)   Changein Ownership of a Substantial Portion of Corporate Assets. A Change in Control based on the sale of assets occurs if aperson or group acquires Forty percent (40%) or more of the gross fair market value of the assets of a corporation over atwelve (12) month period. No change in control results pursuant to this Article (c) if the assets are transferred to certainentities controlled directly or indirectly by the shareholders of the transferring corporation, as defined in TreasuryRegulations §1.409A-3 (i) (5) (vii).

 

1.7   "Claimant”shall mean a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

 

1.8   "Code"shall mean the Internal Revenue Code of 1986, as amended.

 

1.9   "Disability”shall mean a condition of the Participant whereby he or she either: (i) is unable to engage in any substantial gainful activityby reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expectedto last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mentalimpairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months,receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employeesof the Plan Sponsor. The Administrator will determine whether the Participant has incurred a Disability based on its own good faithdetermination and may require the Participant to submit to reasonable physical and mental examinations for this purpose. The Participantwill also be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration, RailroadRetirement Board, or in accordance with a disability insurance program, provided that the definition of disability applied undersuch disability insurance program complies with the requirements of Treasury Regulation §1.409A-3(i)(4) and authoritativeguidance.

 

 

1.10   "EffectiveDate" shall mean the date specified on the first page of this Plan.

 

1.11   "ERISA"shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

 

1.12   "NormalRetirement Age" shall mean the date the Participant attains age 65.

 

1.13   "NormalRetirement Benefit" shall mean an annual benefit payment in the amount of Two Thousand Six hundred Three dollars ($2,603)for a period of Fifteen (15) years.

 

1.14   "Participant"shall mean Gregory Cockerham

 

1.15   "Plan"shall mean this Supplemental Executive Retirement Plan Agreement, all Election Forms, the Trust, (if any), and any other writtendocuments relevant to the Plan. For purposes of applying Code §409A requirements, this Plan is a non-account balance planunder Treasury Regulation § 1.409-1(c)(2)(i)(A).

 

1.16   "PlanAdministrator" or "Administrator" shall be a committee designated by the Plan Sponsor. If a Participant is partof a group of persons designated as a committee or Plan Administrator, then the Participant may not participate in any activityor decision relating solely to his or her individual benefits under this Plan. Matters solely affecting the applicable Participantwill be resolved by the remaining committee members.

 

1.17   "PlanSponsor" shall mean the person or entity: (i) receiving the services of the Participant; and (ii) all persons with whom suchperson or entity would be considered a single employer under the parent-subsidiary rules of Code §414(b) or §414(c).

 

1.18   "PlanYear" shall mean, for the first Plan Year, the period beginning on the Effective Date of the Plan and ending December 31 ofsuch calendar year, and thereafter, a twelve (12) month period beginning January 1 of each calendar year and continuing throughDecember 31 of such calendar year.

 

1.19   "Section409A" shall mean Section 409A of the Code and the Treasury Regulations and other Applicable Guidance issued under that Section.

 

1.20   "Separationfrom Service" shall mean the occurrence of a Participant's death, retirement, or "other termination of employment"(as defined in Treasury Regulations §1-409A-1 (h)( l)(ii)) with the Plan Sponsor (as defined in Treasury Regulations §1.409A-1(h)(3)). However, a Separation from Service shall not occur if the Participant is on military leave, sick leave, or other bonafide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retainsa right to reemployment with the Plan Sponsor under an applicable statute or by contract.

 

 

1.21   "SpecifiedEmployee" shall mean that the Participant also satisfies the definition of a "key employee" as such term is definedin Code §416(i) (without regard to Section 416(i)(5)). However, the Participant is not a Specified Employee unless any stockof the Plan Sponsor is publicly traded on an established securities market or otherwise, as defined in Code §1.897-l(m). Ifthe Participant is a key employee at any time during the twelve (12) months ending on the identification date (see below), theParticipant is a Specified Employee for the twelve (12) month period commencing on the first day of the fourth month followingthe identification date. For purposes of this Article, the identification date is December 31. The determination of the Participantas a Specified Employee shall be made by the Administrator in accordance with IRC Section 416(i), the "specified employee"requirements of Section 409A, and Treasury Regulations.

 

1.22   "TaxableYear" shall mean the twelve (12) consecutive month period ending each December 31.

 

1.23   "TreasuryRegulations" shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, asthey may be amended from time to time.

 

1.24   "Trust"shall mean one or more trusts that may be established in accordance with the terms of this Plan.

 

**ARTICLE 2**

**SELECTION, ENROLLMENT, ELIGIBILITY**

 

2.1   Selectionby Plan Sponsor. Participation in the Plan shall be limited to Gregory Cockerham, a member of a select group of management or highlycompensated employees of the Plan Sponsor, as determined by the Plan Sponsor in its sole and absolute discretion.

 

2.2   Re-Employment.If a Participant who incurs a Separation from Service is subsequently re-employed, he or she may, at the sole and absolute discretionof the Plan Administrator, become a Participant in accordance with the provisions of the Plan.

 

2.3   Eligibility;Commencement of Participation. Provided that the Participant has met all enrollment requirements set forth in the Plan and requiredby the Plan Administrator, the Participant shall continue participation in the Plan on the date the Plan is executed by the PlanSponsor and the Participant.

 

2.4   Terminationof Participation. If the Plan Administrator determines in good faith that a Participant no longer qualifies as a member of a selectgroup of management or highly compensated employees, as membership in such group is determined in accordance with Section 201(2),301(a)(3) and 401(a)(1) of ERISA, the Plan Administrator shall cease further benefit accruals hereunder.

 

**ARTICLE 3**

**BENEFITS**

 

3.1   Normal RetirementBenefit. If the Participant remains in the service of the Plan Sponsor until reaching his Normal Retirement Age, the Participantshall be entitled to his Normal Retirement Benefit. The annual installments shall commence to be paid on the on the first day ofthe second month following the Participant's Separation from Service. Notwithstanding the foregoing, in the event that the Participantis determined by the Plan Administrator to be a Specified Employee, the first benefit payment shall be paid on the first day ofthe seventh month following Separation from Service.

 

 

3.2   Death Priorto Commencement of Benefit Payments. In the event the Participant should die while actively employed by the Plan Sponsor at anytime after the date of this Plan but prior to his Normal Retirement Age, the Plan Sponsor will pay the Accrued Benefit in fifteen(15) equal annual installments to the Participant's Beneficiary. The payments shall commence to be paid on the first day of thesecond month following the month in which the Participant dies.

 

3.3   Death Subsequentto Commencement of Benefit Payments. In the event the Participant dies while receiving payments, but prior to receiving the fifteen(15) annual installment payments due and owing hereunder, the unpaid balance of the payments shall continue to be paid to the Participant’sBeneficiary for the balance of the fifteen (15) annual installments.

 

3.4   DisabilityBenefit. In the event the Participant becomes Disabled prior to the date the Participant dies or experiences a Separation fromService, and prior to the date of a Change in Control, the Participant shall be entitled to receive his Accrued Benefit, calculatedas of the date of determination of Disability. Such benefit shall commence to be paid on the first day of the month following theParticipant's sixty-fifth (65th) birthday or death (whichever occurs first), and shall be paid in fifteen (15) equal annual installments.

 

3.5   Separationfrom Service Benefit. If the Participant experiences a Separation from Service prior to Normal Retirement Age, death, Disability,or as described in the second paragraph of Section 3.6, then the Participant shall be entitled to a benefit equal to the AccruedBenefit, calculated as of the date of Separation from Service. Such benefit shall commence to be paid on the first day of the secondmonth following the month in which the Participant achieves Normal Retirement Age or dies (whichever occurs first), and shall bepaid in fifteen (15) equal annual installments. Notwithstanding the foregoing, in the event that the Participant is determinedby the Plan Administrator to be a Specified Employee, the first benefit payment shall be paid on the later of (i) the first dayof the second month following the month in which the Participant achieves Normal Retirement Age or (ii) the first day of the seventhmonth following Separation from Service (except in the case of a Separation from Service due to death).

 

3.6   Change inControl Benefit. In the event there is a Change in Control prior to the Participant's Normal Retirement Age, and prior to the datethe Participant dies, becomes Disabled or experiences a Separation from Service, the Participant shall become 100% vested in hisNormal Retirement Benefit. Subject to the paragraph below, the Participant's Normal Retirement Benefit shall commence to be paidon the first day of the second month following the month in which the Participant attains Normal Retirement Age or dies, whicheveris first to occur.

 

 

Notwithstanding the preceding,if the Participant experiences a Separation from Service within 24 months following the Change in Control, the following provisionsapply. The Participant's Normal Retirement Benefit shall commence to be paid on the first day of the second month following theParticipant's Separation from Service (or, if the Participant is a Specified Employee, on the first day of the seventh month followingthe Participant's Separation from Service). In lieu of receiving the Normal Retirement Benefit in fifteen (15) annual installments,the Participant may elect to receive the Normal Retirement Benefit pursuant to this Section 3.6 in the form of (i) a lump sum,(ii)   equal annual installments over two (2) years, or (iii) equal annual installments over five (5) years. Anyelection by the Participant pursuant to this Section 3.6 must be submitted to the Plan Sponsor by the date the Participant initiallybecomes eligible to participate in the Plan.

 

3.7   Terminationfor Cause. Notwithstanding anything in this Plan to the contrary, if the Plan Sponsor terminates the Participant's employment for"Cause", then the Participant shall not be entitled to any benefits under the terms of this Plan.

 

3.8   Prohibitionon Acceleration of Payments. Notwithstanding anything in this Plan to the contrary, neither the Plan Sponsor nor a Participantmay accelerate the time or schedule of any payment or amount scheduled to be paid under this Plan, except that the Plan Sponsor,in its discretion, may accelerate payments as permitted by Treasury Regulations §1.409A-3(j)(4). The Plan Sponsor shall denyany change made to an election if the Plan Sponsor determines that the change violates the requirements of authoritative guidance.

 

3.9   SubsequentChanges in the Time or Form of Payment. If permitted by the Plan Sponsor, a Participant may elect to change the time or form ofpayments (collectively, "payment elections"), provided the following conditions are met:

 

(i)   Suchchange will not take effect until at least twelve (12) months after the date on which the new payment election is made and approvedby the Plan Administrator;

 

(ii)   Ifthe change of payment election relates to a payment based on Separation from Service, or if the payment is at a specified timeor pursuant to a fixed schedule, the change of payment election must result in payment being deferred for a period of not lessthan five (5) years from the date such payment would otherwise have been paid (or in the case of a life annuity or installmentpayments, which are treated as a single payment, five (5) years from the date the first amount was scheduled to be paid);

 

(iii)   Ifthe change of payment election relates to a payment at a specified time or pursuant to a fixed schedule, the Participant or PlanSponsor must make the change of payment election not less than twelve (12) months before the date the payment is scheduled to bepaid (or in the case of a life annuity or installment payments, which are treated as a single payment, twelve (12) months beforethe date the first amount was scheduled to be paid).

 

 

Notwithstanding the preceding,to the extent permitted under Section 409A and by the Plan Sponsor, the Participant may elect the timing and manner of distributionsduring 2008 (except that a Participant cannot in 2008 change payment elections with respect to payments that the Participant wouldotherwise receive in 2008, or make an election that causes payments scheduled for subsequent years to be made in 2008), and suchelection shall not be treated as a change in the form and timing of payment or an acceleration of payment under Section 409A.

 

3.10   Delay inPayment by Plan Sponsor.

 

(a)   Apayment may be delayed to a date after the designated payment date under any of the circumstances described below, and the provisionwill not fail to meet the requirements of establishing a permissible payment event. The delay in the payment will not constitutea subsequent deferral election, so long as the Plan Sponsor treats all payments to similarly situated Participants on a reasonablyconsistent basis.

 

(i)   Paymentssubject to Section 162(m). A payment may be delayed to the extent that the Plan Sponsor reasonably anticipates that if the paymentwere made as scheduled, the Plan Sponsor's deduction with respect to such payment would not be permitted due to the applicationof Code §162(m). If a payment is delayed, such payment must be made either:

 

(1)   duringthe Participant's first Taxable Year in which the Plan Sponsor reasonably anticipates, or should reasonably anticipate, that ifthe payment is made during such year, the deduction of such payment will not be barred by application of Code §162(m) or,

 

(2)   duringthe period beginning with the date of the Participant's Separation from Service and ending on the later of the last day of theTaxable Year of the Plan Sponsor in which the Participant separates from service or the 15th day of the third month following theParticipant's Separation from Service. Where any scheduled payment to a specific Participant in the Plan Sponsor's Taxable Yearis delayed in accordance with this Article, the delay in payment will be treated as a subsequent deferral election unless all scheduledpayments to the Participant that could be delayed in accordance with this Article are also delayed. Where the payment is delayedto a date on or after the Participant's Separation from Service, the payment will be considered a payment upon a Separation fromService for purposes of the rules under Treasury Regulations §1.409A-3(i)(2) (payments to specified employees upon a separationfrom service) and, the 6 month delay rule will apply for Specified Employees.

 

(ii)   Paymentsthat would violate Federal securities laws or other applicable law. A payment may be delayed where the Plan Sponsor reasonablyanticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the paymentis made at the earliest date at which the Plan Sponsor reasonably anticipates that the making of the payment will not cause suchviolation. The making of a payment that would cause inclusion in gross income or the application of any penalty provision or otherprovision of the Internal Revenue Code is not treated as a violation of applicable law.

 

 

(iii)   Other eventsand conditions. The Plan Sponsor may delay a payment upon such other events and conditions as the Commissioner of the IRS may prescribe.

 

(b)   Treatmentof Payment as Made on Designated Payment Date. Each payment under this Plan is deemed made on the required payment date even ifthe payment is made after such date, provided the payment is made by the latest of: (i) the end of the calendar year in which thepayment is due; (ii) the 15th day of the third calendar month following the payment due date; (iii) in case the Plan Sponsor cannotcalculate the payment amount on account of administrative impracticality which is beyond the Participant's control (or the controlof the Participant's estate), in the first calendar year in which payment is practicable; (iv) in the case where the payment wouldjeopardize the ability of the Plan Sponsor to continue as a going concern, in the first calendar year in which the making of thepayment would not have such effect.

 

3.11   UnsecuredGeneral Creditor Status of Participant:

 

(a)   Paymentto the Participant or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part ofthe general, unrestricted assets of the Plan Sponsor and no person shall have any interest in any such asset by virtue of any provisionof this Plan. The Plan Sponsor's obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. Tothe extent that any person acquires a right to receive payments from the Plan Sponsor under the provisions hereof, such right shallbe no greater than the right of any unsecured general creditor of the Plan Sponsor and no such person shall have or acquire anylegal or equitable right, interest, or claim in or to any property or assets of the Plan Sponsor.

 

(b)   Inthe event that the Plan Sponsor purchases an insurance policy or policies insuring the life of a Participant or employee, to allowthe Plan Sponsor to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiaryshall have any rights whatsoever in said policy or the proceeds therefrom. The Plan Sponsor or the Trustee of the Trust (if any)shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidentsof ownership therein. No insurance policy with regard to any director, "highly compensated employee”, or "highlycompensated individual” as defined in IRS Section 101(j) shall be acquired before satisfying the Section 101(j) "Noticeand Consent” requirements,

 

(c)   Inthe event that the Plan Sponsor purchases an insurance policy or policies on the life of a Participant as provided for above, thenall of such policies shall be subject to the claims of the creditors of the Plan Sponsor.

 

(d)   Ifthe Plan Sponsor chooses to obtain insurance on the life of a Participant in connection with its obligations under this Plan, theParticipant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may berequired by the Plan Sponsor or the insurance company designated by the Plan Sponsor.

 

 

3.12   Facilityof Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administratormay make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains hisor her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee.Any such distribution shall fully discharge the Plan Sponsor and the Plan Administrator from further liability on account thereof.

 

3.13   Excise TaxLimitation. In the event that any payment or benefit (within the meaning of Code §280G(b)(2) of the Code) to the Participantor for the Participant's benefit paid or payable or distributed or distributable (including, but not limited to, the accelerationof the time for the vesting or payment of such benefit or payment) pursuant to the terms of this Plan or otherwise in connectionwith, or arising out of, the Participant’s employment with the Plan Sponsor or any of its affiliates or a Change in Controlwithin the meaning of Code §280G of the Code (a "Payment" or "Payments"), would be subject to the excisetax imposed by Code §4999 of the Code (the "Excise Tax"), then the Payments shall be increased in an amount necessaryto provide for the payment of the excise tax imposed by Code §4999 (the "Section 4999 Limit"). Any payment madeto the Participant under this Section 3.13 shall be made no later than the end of the calendar year following the calendar yearin which the Participant remits the related taxes.

 

**ARTICLE 4**

**VESTING AND TAXES**

 

4.1   Vesting. TheParticipant shall be vested at all times in his Accrued Benefit. Upon attainment of Normal Retirement Age, the Participant shallbe One Hundred (100%) percent vested in his Normal Retirement Benefit.

 

4.2   Accelerationof Vesting. If, prior to the Participant's Normal Retirement Age, and prior to the date the Participant dies, becomes Disabledor experiences a Separation from Service, there is a Change in Control of the Plan Sponsor, then the Participant shall be One Hundred(100%) percent vested in his Normal Retirement Benefit.

 

4.3   FICA, Withholdingand Other Taxes:

 

(a)   Whena Participant becomes vested in a portion of his Normal Retirement Benefit, the Plan Sponsor shall withhold from the Participant'scash compensation in a manner determined in the sole discretion of the Plan Sponsor, the Participant's share of FICA and otheremployment taxes on such vested Normal Retirement Benefit.

 

(b)   Distributions.The Plan Sponsor, or trustee of the Trust, shall withhold from any payments made to a Participant or Beneficiary under this Planall federal, state and local income, employment and other taxes required to be withheld by the Plan Sponsor in a manner determinedin the sole discretion of the Plan Sponsor or the trustee of the Trust in compliance with applicable tax withholding requirements.

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**ARTICLE 5**

**BENEFICIARY DESIGNATION**

 

5.1   Designationof Beneficiaries.

 

(a)   TheParticipant may designate any person or persons (who may be named contingently or successively) to receive any benefits payableunder the Plan upon the Participant's death, and the designation may be changed from time to time by the Participant by filinga new designation. Each designation will revoke all prior designations by the Participant and shall be in the form prescribed bythe Administrator, and shall be effective only when filed in writing with the Administrator during the Participant’s lifetime.

 

(b)   Inthe absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no livingBeneficiary validly named by the Participant, the Plan Sponsor shall pay the benefit payment to the Participant's spouse, if thenliving, and if the spouse is not then living to the Participant's then living descendants, if any, per stirpes, and if there areno living descendants, to the Participant's estate. In determining the existence or identity of anyone entitled to a benefit payment,the Plan Sponsor may rely conclusively upon information supplied by the Participant's personal representative, executor, or administrator.

 

(c)   Ifa question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if adispute arises with respect to any death benefit payment under the Plan, the Plan Sponsor may distribute the payment to the Participant'sestate without liability for any tax or other consequences, or may take any other action which the Plan Sponsor deems to be appropriate.

 

5.2   Informationto be Furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries. Any communication, statement,or notice addressed to the Participant or to a Beneficiary at his or her last post office address as shown on the Plan Sponsor'srecords shall be binding on the Participant or Beneficiary for all purposes of this Plan. The Plan Sponsor shall not be obligatedto search for any Participant or Beneficiary beyond the sending of a registered letter to the last known address.

 

**ARTICLE 6**

**ADMINISTRATION**

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6.1   AdministratorDuties. The Administrator shall be responsible for the management, operation, and administration of the Plan. TheAdministrator shall act at meetings by affirmative vote of a majority of its members. Any action permitted to be taken at ameeting may be taken without a meeting if, prior to such action, a unanimous written consent to the action is signed by allmembers and such written consent is filed with the minutes of the proceedings of the Administrator, provided, however that nomember may vote or act upon any matter which relates to his or her status as a Participant. The chair, or any other member ormembers of the Administrator designated by the chair, may execute any certificate or other written direction on behalf of theAdministrator. When making a determination or calculation, the Administrator shall be entitled to rely on informationfurnished by the Participant or the Plan Sponsor. No provision of this Plan shall be construed as imposing on theAdministrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or otherlaw.

 

 

6.2   AdministratorAuthority. The Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administrationof this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

 

(a)   Toconstrue and interpret the terms and provisions of this Plan;

 

(b)   Tocompute and certify the amount and kind of benefits payable to the Participant and their Beneficiaries; to determine the time andmanner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

 

(c)   Tomaintain all records that may be necessary for the administration of this Plan;

 

(d)   Toprovide for the disclosure of all information and the filing or provision of all reports and statements to the Participant, Beneficiaries,and governmental agencies as shall be required by law;

 

(e)   Tomake and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistentwith the terms hereof;

 

(f)   Toadminister this Plan’s claims procedures;

 

(g)   Toapprove election forms and procedures for use under this Plan; and

 

(h)   Toappoint a plan record keeper or any other agent, and to delegate to them such powers and duties in connection with the administrationof this Plan as the Administrator may from time to time prescribe.

 

6.3   Binding Effectof Decision. The decision or action of the Administrator with respect to any question arising out of or in connection with theadministration, interpretation, and application of this Plan and the rules and regulations promulgated hereunder shall be finaland conclusive and binding upon all persons having any interest in this Plan.

 

6.4   Compensation,Expenses, and Indemnity. The Administrator shall serve without compensation for services rendered hereunder. The Administratoris authorized at the expense of the Plan Sponsor to employ such legal counsel and/or Plan record keeper as it may deem advisableto assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Plan shallbe paid by the Plan Sponsor.

 

6.5   Plan SponsorInformation. To enable the Administrator to perform its functions, the Plan Sponsor shall supply full and timely information tothe Administrator, on all matters relating to the compensation of the Participant, the date and circumstances of the Disability,death, or Separation from Service of the Participant, and such other pertinent information as the Administrator may reasonablyrequire.

 

 

6.6   Periodic Statements.Under procedures established by the Administrator, Participant shall be provided a statement of his Accrued Benefit on an annualbasis.

 

**ARTICLE 7**

**CLAIMS PROCEDURE**

 

7.1   Claims Procedures.This Section 7.1 is based on final regulations issued by the Department of Labor and published in the Federal Register on November21, 2000 and codified at section 2560.503-1 of the Department of Labor Regulations. If any provision of this Section 8.4 conflictswith the requirements of those regulations, the requirements of those regulations will prevail.

 

(a)   InitialClaim. A Participant or Beneficiary who believes he or she is entitled to any Benefit (a "Claimant") under this Planmay file a claim with the Administrator. The Administrator will review the claim itself or appoint another individual or entityto review the claim.

 

(i)   BenefitClaims that do not Require a Determination of Disability. If the claim is for a benefit other than a disability benefit, the Claimantwill be notified within ninety (90) days after the claim is filed whether the claim is allowed or denied, unless the Claimant receiveswritten notice from the Administrator or appointee of the Administrator before the end of the ninety (90) day period stating thatspecial circumstances require an extension of the time for decision, such extension not to extend beyond the day which is one hundredeighty (180) days after the day the claim is filed.

 

(ii)   DisabilityBenefit Claims. In the case of a benefits claim that requires a determination by the Plan Administrator of a Participant's disabilitystatus, the Plan Administrator will notify the Claimant of the Plan's adverse benefit determination within a reasonable periodof time, but not later than forty-five (45) days after receipt of the claim. If, due to matters beyond the control of the Plan,the Plan Administrator needs additional time to process a claim, the Claimant will be notified, within forty-five (45) days afterthe Plan Administrator receives the claim, of those circumstances and of when the Plan Administrator expects to make its decisionbut not beyond seventy-five (75) days. If, prior to the end of the extension period, due to matters beyond the control of thePlan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for upto one hundred five (105) days, provided that the Plan Administrator notifies the Claimant of the circumstances requiring the extensionand the date as of which the Plan expects to render a decision. The extension notice will specifically explain the standards onwhich entitlement to a disability benefit is based, the unresolved issues that prevent a decision on the claim and the additionalinformation needed from the Claimant to resolve those issues, and the Claimant will be afforded at least forty-five (45) days withinwhich to provide the specified information.

 

 

(iii)   Mannerand Content of Denial of Initial Claims. If the Plan Administrator denies a claim, it must provide to the Claimant, in writingor by electronic communication:

 

(A)   Thespecific reasons for the denial;

 

(B)   Areference to the Plan provision or insurance contract provision upon which the denial is based;

 

(C)   Adescription of any additional information or material that the Claimant must provide in order to perfect the claim;

 

(D)   Anexplanation of why such additional material or information is necessary;

 

(E)   Noticethat the Claimant has a right to request a review of the claim denial and information on the steps to be taken if the Claimantwishes to request a review of the claim denial; and

 

(F)   Astatement of the participant's right to bring a civil action under ERISA section 502(a) following a denial on review of the initialdenial.

 

In addition,in the case of a denial of disability benefits on the basis of the Plan Administrator's independent determination of the Participant'sdisability status, the Plan Administrator will provide a copy of any rule, guideline, protocol, or other similar criterion reliedupon in making the adverse determination (or a statement that the same will be provided upon request by the Claimant and withoutcharge).

 

(b)   Review Procedures.

 

(i)   BenefitClaims that do not Require a Determination of Disability. Except for claims requiring an independent determination of a Participant'sdisability status, a request for review of a denied claim must be made in writing to the Plan Administrator within sixty (60) daysafter receiving notice of denial. The decision upon review will be made within sixty (60) days after the Plan Administrator's receiptof a request for review, unless special circumstances require an extension of time for processing, in which case a decision willbe rendered not later than one hundred twenty (120) days after receipt of a request for review. A notice of such an extension mustbe provided to the Claimant within the initial sixty (60) day period and must explain the special circumstances and provide anexpected date of decision.

 

The reviewerwill afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and recordsand to submit issues and comments in writing to the Plan Administrator. The reviewer will take into account all comments, documents,records and other information submitted by the Claimant relating to the claim regardless of whether the information was submittedor considered in the initial benefit determination.

 

 

(ii)   DisabilityBenefit Claims. In addition to having the right to review documents and submit comments as described in (i) above, a Claimant whoseclaim for disability benefits requires an independent determination by the Plan Administrator of the Participant's disability statushas at least one hundred eighty (180) days following receipt of a notification of an adverse benefit determination within whichto request a review of the initial determination. In such cases, the review will meet the following requirements:

 

(A)   ThePlan will provide a review that does not afford deference to the initial adverse benefit determination and that is conducted byan appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the appeal, nor isa subordinate of the individual who made the determination.

 

(B)   Theappropriate named fiduciary of the Plan will consult with a health care professional who has appropriate training and experiencein the field of medicine involved in the medical judgment before making a decision on review of any adverse initial determinationbased in whole or in part on a medical judgment. The professional engaged for purposes of a consultation in the preceding sentencewill not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or thesubordinate of any such individual.

 

(C)   ThePlan will identify to the Claimant the medical or vocational experts whose advice was obtained on behalf of the Plan in connectionwith the review, without regard to whether the advice was relied upon in making the benefit review determination.

 

(D)   Thedecision on review will be made within forty-five (45) days after the Plan Administrator's receipt of a request for review, unlessspecial circumstances require an extension of time for processing, in which case a decision will be rendered not later than ninety(90) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initialforty-five (45) day period and must explain the special circumstances and provide an expected date of decision.

 

(iii)   Mannerand Content of Notice of Decision on Review. Upon completion of its review of an adverse initial claim determination, the PlanAdministrator will give the Claimant, in writing or by electronic notification, a notice containing:

 

(A)   itsdecision;

 

(B)   thespecific reasons for the decision;

 

(C)   therelevant Plan provisions or insurance contract provisions on which its decision is based;

 

(D)   astatement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents,records and other information in the Plan's files which is relevant to the Claimant's claim for benefits;

 

(E)   astatement describing the Claimant's right to bring an action for judicial review under ERISA section 502(a); and

 

 

(F)   ifan internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review,a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimantupon request.

 

(c)   Calculationof Time Periods. For purposes of the time periods specified in this Section, the period of time during which a benefit determinationis required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether allthe information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant’s failureto submit all information necessary, the period for making the determination shall be tolled from the date the notification issent to the Claimant until the date the Claimant responds.

 

(d)   Failureof Plan to Follow Procedures. If the Plan fails to follow the claims procedures required by this Section 7.1, a Claimant shallbe deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to pursue any availableremedy under ERISA section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yielda decision on the merits of the claim.

 

(e)   Failureof Claimant to Follow Procedures. A Claimant's compliance with the foregoing provisions of this Section 7.1 is a mandatory prerequisiteto the Claimant's right to commence any legal action with respect to any claim for benefits under the Plan.

 

7.2   Arbitrationof Claims. All claims or controversies arising out of or in connection with this Plan shall, subject to the initial review providedfor in the foregoing provisions of this Article, be resolved through arbitration. Except as otherwise mutually agreed to by theparties, any arbitration shall be administered under and by the Judicial Arbitration & Mediation Services, Inc. (“JAMS”),in accordance with the JAMS procedures then in effect. The arbitration shall be held in the JAMS office nearest to where the Claimantis or was last employed by the Plan Sponsor or at a mutually agreeable location.

 

**ARTICLE 8**

**AMENDMENT AND TERMINATION**

** **

8.1   Amendment.The Plan Sponsor reserves the right to amend this Plan at any time to comply with Section 409A and other Applicable Guidance orfor any other purpose, provided that such amendment will not cause the Plan to violate the provisions of Section 409A. Except tothe extent necessary to bring this Plan into compliance with Section 409A, no amendment or modification shall be effective to decreasethe value or vested percentage of a Participant's Accrued Benefit in existence at the time an amendment or modification is madeto the Plan.

 

8.2   Plan Termination.The Plan Sponsor reserves the right to terminate this Plan in accordance with one of the following, subject to the restrictionsimposed by Section 409A and authoritative guidance:

 

 

(a)   CorporateDissolution or Bankruptcy. This Plan may be terminated within twelve (12) months of a corporate dissolution taxed under Code§ 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), and distributions may thenbe made to the Participant provided that the amounts payable under this Plan are included in the Participants' gross incomein the latest of:

 

(i)   Thecalendar year in which the Plan termination occurs;

 

(ii)  Thefirst calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

 

(iii) Thefirst calendar year in which the payment is administratively practicable.

 

(b)   Changein Control. This Plan may be terminated within the thirty (30) days preceding or the twelve (12) months following a Change in Control.This Plan will then be treated as terminated only if all arrangements that are treated as having been deferred under a single planin accordance with Applicable Guidance are terminated so that all participants in all those terminated arrangements who experiencedthe Change in Control event are required to receive all amounts of compensation deferred under the terminated arrangements withintwelve (12) months of the date of termination of the arrangements.

 

(c)   DiscretionaryTermination. The Plan Sponsor may also terminate this Plan and make distributions provided that:

 

(i)   Allplans sponsored by the Plan Sponsor that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-l(c)are terminated;

 

(ii)  Nopayments, other than payments that would be payable under the terms of this Plan if the termination had not occurred, are madewithin twelve (12) months of this Plan termination;

 

(iii) Allpayments are made within twenty-four (24) months of this Plan termination; and

 

(iv)  Neitherthe Plan Sponsor nor any of its affiliates adopts a new plan that would be aggregated with any terminated plan if the same Participantparticipated in both arrangements at any time within three (3) years following the date of termination of this Plan.

 

(v)   Thetermination does not occur proximate to a downturn in the financial health of the Plan Sponsor.

 

 

**ARTICLE 9**

**THE TRUST**

 

9.1   Establishmentof Trust. The Plan Sponsor may establish a grantor trust (the “Trust”), of which the Plan Sponsor is the grantor, withinthe meaning of subpart E, part I, subchapter J, subtitle A of the Code, to pay benefits under this Plan. If the Plan Sponsor establishesa Trust, all benefits payable under this Plan to a Participant shall be paid directly by the Plan Sponsor from the Trust. To theextent such benefits are not paid from the Trust, the benefits shall be paid from the general assets of the Plan Sponsor. The Trust,(if any), shall be a grantor trust which conforms to the terms of the model trust as described in IRS Revenue Procedure 92-64,I.R.B. 1992-33, as same may be amended or modified from time to time. If the Plan Sponsor establishes a Trust, the assets of theTrust will be subject to the claims of the Plan Sponsor's creditors in the event of its insolvency. Except as may otherwise beprovided under the Trust, the Plan Sponsor shall not be obligated to set aside, earmark, or escrow any funds or other assets tosatisfy its obligations under this Plan, and the Participant and/ or his or her designated Beneficiaries shall not have any propertyinterest in any specific assets of the Plan Sponsor other than the unsecured right to receive payments from the Plan Sponsor, asprovided in this Plan.

 

9.2   Interrelationshipof the Plan and the Trust. The provisions of this Plan shall govern the rights of a Participant to receive distributions pursuantto this Plan. The provisions of the Trust (if established) shall govern the rights of the Participant and the creditors of thePlan Sponsor to the assets transferred to the Trust. The Plan Sponsor and each Participant shall at all times remain liable tocarry out its obligations under this Plan. The Plan Sponsor's obligations under this Plan may be satisfied with Trust assets distributedpursuant to the terms of the Trust.

 

9.3   Contributionto the Trust. Amounts may be contributed by the Plan Sponsor to the Trust at the sole discretion of the Plan Sponsor.

** **

**ARTICLE 10**

**MISCELLANEOUS**

 

10.1   Validity.In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall notaffect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision hadnever been inserted herein; except to the extent that Section 409A requires that this Section 10.1   bedisregarded because it purports to nullify Plan terms that are not in compliance with Section 409A.

 

 

10.2   Nonassignability.Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage,or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder,or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No partof the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment (except to the extent thePlan Sponsor may be required to garnish amounts from payments due under this Plan pursuant to applicable law), or sequestrationfor the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferableby operation of law in the event of a Participant's or any other person's bankruptcy or insolvency, or be transferable to a spouseas a result of a property settlement or otherwise. If any Participant, Beneficiary, or successor in interest is adjudicated bankruptor purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate,or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, inits discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary,or successor in interest in such manner as the Plan Administrator shall direct.

 

10.3   Not a Contractof Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the PlanSponsor and the Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the serviceof the Plan Sponsor as an employee or otherwise or to interfere with the right of the Plan Sponsor to discipline or discharge theParticipant at any time.

 

10.4   UnclaimedBenefits. In the case that the Plan Administrator is unable to locate the Participant or Beneficiary to whom a benefit is payable,such Plan benefit shall be forfeited to the Plan Sponsor upon the Plan Administrator's determination. Notwithstanding the foregoing,payment may be made to a Participant, and that payment will be treated as made upon the date specified under the Plan, if the Participantprovides notice to the Plan Sponsor within ninety (90) days of the latest date upon which the payment could have been timely madein accordance with the terms of the Plan and Section 409A, and if not paid, if the Participant takes further enforcement measureswithin one-hundred eighty (180) days after such latest date.

 

10.5   GoverningLaw. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the Stateof Maryland without regard to its conflicts of laws principles.

 

10.6   Notice. Anynotice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall besigned by the party giving or making the same. If such notice, consent, or demand is mailed, it shall be sent by United Statescertified mail, postage prepaid, addressed to the addressee's last known address as shown on the records of the Plan Sponsor. Thedate of such mailing shall be deemed the date of notice consent or demand. Any person may change the address to which notice isto be sent by giving notice of the change of address in the manner aforesaid.

 

10.7   Coordinationwith Other Benefits. The benefits provided for a Participant and Participant's Beneficiary under this Plan are in addition to anyother benefits available to such Participant under any other plan or program for employees of the Plan Sponsor. This Plan shallsupplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly providedherein.

 

 

10.8   Compliance. A Participant shall have no right to receive payment with respect to the Participant'sAccrued Benefit until all legal and contractual obligations of the Plan Sponsor relating to establishment of the Plan and the makingof such payments shall have been complied with in full.

 

10.9   Compliancewith Section 409A and Authoritative Guidance. Notwithstanding anything in this Plan to the contrary, all provisions of this Plan,including but not limited to the definitions of terms, elections to defer, and distributions, shall be made in accordance withand shall comply with Section 409A and any authoritative guidance. The Plan Sponsor will amend the terms of this Plan retroactively,if necessary, to the extent required to comply with Section 409A and any authoritative guidance. No election made by a Participanthereunder, and no change made by a Participant to a previous election, shall be accepted by the Plan Sponsor if the Plan Sponsordetermines that acceptance of such election or change could violate any of the requirements of Section 409A or the authoritativeguidance. This Plan and any accompanying forms shall be interpreted in accordance with, and incorporate the terms and conditionsrequired by, Section 409A and the authoritative guidance, including, without limitation, any such Treasury Regulations or otherguidance that may be issued after the date hereof.

 

IN WITNESS WHEREOF, the Plan Sponsorhas signed this Plan document as of the Effective Date.

  

| WITNESS:                                |   | FOR THE PLAN SPONSOR                  |
|-----------------------------------------|--------|---------------------------------------|
|                                    |   |                                  |
| /s/ Felicia C. Norris                   |   | /s/ William J. Pasenelli              |
| (third party witness) Participant) |   | (signature of Bank officer other than |
|                                    |   |                                  |
| Felicia C. Norris                       |   | William J. Pasenelli                  |
| (print name)                            |   | (print name)                          |
|                                    |   |                                  |
| DATE:                                   |   | PARTICIPANT:                          |
|                                    |   |                                  |
| 12/18/14                                |   | /s/ Gregory Cockerham                 |
|                                    |   | **Gregory Cockerham**                 |